In many Least Developed Countries and Small Island Developing States, such as in Kiribati, formal national adaptation programmes are currently being operationalised. A key focus is enhancing the adaptive capacity of vulnerable communities through piloting of sectoral adaptation strategies such as diversifying water resources. This study argues that fundamental to water management and adaptation planning is the integration of people's cultural values attached to the assets/resources they control and utilise in their efforts to adapt to various stresses on water resources. The results from integrating cultural resources into a Sustainable Livelihoods Framework indicate that people's capacity to diversify is constrained by cultural processes negotiated in their daily lives that reinforced and reproduced hardships. Material resources provided personal significance when they were spent on maintaining social identity, expressed in recent times through the church. Thus fewer resources were available for pursuing a diversification strategy. Furthermore, power structures in the church delimited benefits to the individual, depriving people of their freedom to exercise autonomous agency and achieve personal wellbeing. The study demonstrates the significance of religion to adaptation. Moreover, it highlights the need to consider the relational aspects of assets, in conditioning how people access and utilise assets in pursuing adaptation strategies.